Gilead Sciences building on Lakeside Drive, in Foster City, Calif., photographed on Friday, Sept 9, 2011. Gilead Sciences purchased the properties at 301 and 303 Velocity Way in 2009 to enable the company to expand and double its Foster City workforce.
(John Green/Staff)

Today: Wall Street's major indexes didn't experience much movement on Friday, but specific Silicon Valley stocks did: Gilead shares fell almost 15 percent after a drug acquired in a major move proved to not be as effective as expected, SunPower (SPWRA) capitalized on a strong earnings report, and Zynga gained on reports of less reliance on Facebook.

Drug's failure to completely cure hepatitis C hurts Gilead

After Thursday's big gains put the Dow Jones industrial average within range of 13,000 and the Nasdaq to striking distance of 3,000, Friday's trades failed to swing the indexes to those big, round numbers. However, there was a lot of movement in some Silicon Valley stocks, none more so than Gilead.

The Foster City-based biopharmaceutical company announced Friday morning that a hepatitis C drug that was a major reason for its $11 billion acquisition of Pharmassetis not the panacea for which executives hoped. A study showed that some patients who took the drug relapsed after completion of the treatment, leaving Gilead scientists to conclude that patients would need help from other drugs to beat the life-threatening liver disease.

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"Additional direct acting antivirals may be necessary to effectively treat this patient population," Norbert Bischofberger, Gilead's chief scientific officer, concluded in a statement, according to Bloomberg News. "We will continue to explore a number of therapeutic approaches to address this significant unmet medical need, including combinations with other oral antivirals," he added.

Gilead stock plummeted 14.6 percent after the news hit Wall Street, erasing a sizable chunk of the gain the company had netted from the November agreement to buy Pharmasset. Gilead stock had increased 47 percent in the past two months, closing Thursday at $54.81 before falling to $46.82 by the end of Friday's session.

Analysts were mixed on the long-term effects of the study. ISI analyst Mark Schoenebaum told Bloomberg that it was "unquestionably bad news," and Sanford Bernstein analyst Geoff Porges told Reuters that it will "be a blow to confidence in Gilead, their management of the investor expectations, and the value of ... the whole Pharmasset transaction."

"This is the unimaginable happening and it turns a lot of dogma about hepatitis C on its head," Porges added. "This class (of drugs) was viewed as the holy grail."

However, Oppenheimer analyst Bret Holley wrote in a note that the drug, called GS-7977, could still be effective in patients who have not received prior therapies, or those who have different variations of the hepatitis virus than the one tested in the study. Summer Street Research analyst Carol Werther agreed, telling the Associated Press "The drug isn't dead."

However, as Gilead continues to study and attempt to improve the hepatitis C treatment for which it paid such a hefty price, other companies will take advantage: Vertex Pharmaceuticals and Merck both have hepatitis C drugs that have been approved for sale in the U.S. that now seem to have a longer shelf life, and shares in both companies increased Friday.

For Gilead, the key now is to get back to work and figure out how to make GS-7977 an effective treatment despite the setback, WBB Securities Analyst Steve Brozak told AP.

"It isn't so much that this happened," he said. "The critical key is, how does Gilead respond to what just happened?"

Zynga's reported revenue-diversification plan helps stock

Moving in the opposite direction of Gilead was San Francisco social-gaming company Zynga, which leapt more than 7 percent in Friday trading.

Bloomberg News reported Thursday that the company is planning to offer a new publishing system for game developers beginning in March, which will be operated independently of Facebook. The system would allow game developers to advertise and sell their wares in Zynga games and a separate Web portal, with Zynga reaping some of the rewards.

The move would open up a new revenue system for Zynga, which currently makes 90 percent of its sales through Facebook.

"Any progress Zynga can make in revenue diversification is a positive," Colin Sebastian, an analyst at Robert W. Baird & Co., told Bloomberg.

While SunPower's fourth-quarter earnings and profits were down from the year-earlier quarter, the company said it expects 2012 revenue of $2.6 billion to $3 billion, thanks to contracts on two large-scale solar projects.

The company's stock shot up as much as 27.5 percent in Friday trading, but it settled back down by the close of the session to finish up at $8.13, a gain of $0.65, or 8.7 percent.

And the widely watched Standard & Poor's 500 index: Up 3.19, or 0.23 percent, to 1,361.23

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, the Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.